Table of Contents
- Real Estate Performance in 2019
- Metro Manila as a Sustainable and Smart City
- Developments Connecting Provincial Cities to Metro Manila
- Strong Overseas Presence on Lamudi
- Tourism as a Driver of Growth
- Lamudi’s Property Seeker Profile
- Colliers International’s Property Outlook in 2020
- Lamudi’s Real Estate Outlook
- Figure 11. Location of Seekers in Luzon
- Figure 12. Age Distribution of Seekers in Luzon
- Figure 13. Lead Distribution in Luzon
- Figure 14. Age Distribution of Seekers in Visayas
- Figure 15. Location of Seekers in Visayas
- Figure 16. Lead Distribution in Visayas
- Figure 17. Age Distribution of Leads in Mindanao
- Figure 18. Lead Distribution in Mindanao
- Figure 19. Overseas Cities with Growing Interest in Philippine Real Estate
- Figure 20. Lead Distribution from Overseas Searches
REAL ESTATE PERFORMANCE IN 2019
Investments in the real estate industry in 2019 showed a more concerted effort to catch up to trends not only in Southeast Asia but also worldwide. The notable increase in joint ventures between national developers and international companies has given the Philippines some of the most unique structures in recent years. All of this, of course, is backed by a growing demand for a lifestyle that is hinged on green, smart, and connected environments.
Some of the most notable drivers of real estate in 2019 are sustainability, infrastructure spending, overseas demand, and tourism.
Metro Manila as a Sustainable and Smart City
In 2019, several developers have focused on incorporating green architecture in their developments with the objective of advocating for a more sustainable lifestyle, and to reduce their carbon footprint to preserve the environment.
Due to the increase in temperature and carbon emissions, many developers have utilized nature to complement the architecture of their development. Green architecture also facilitates natural lighting and ventilation, utilizing renewable energy.
Another trend in developments today is the use of solar panels in homes. Aside from being environment-friendly and reducing pollution, solar-powered homes are a worthy investment in the long run due to the reduction of power losses.
Overall, the growing trend of incorporating functionality and sustainability in homes and commercial spaces allows customers to enjoy a lifestyle that balances convenience and amusement, all while they invest in protecting and cultivating a green city for the future.
Developments Connecting Provincial Cities to Metro Manila
Metro Manila isn’t the only area that is thriving with commercial establishments, residential high-rises, IT offices, and thoroughfares linking each city together. Provincial cities have also strengthened their presence in the property market by developing key areas for commercial and residential purposes. Cities like Cebu, Davao, and Angeles have welcomed booming IT industries in their investment hubs and have built bridges and roads, making it easier to travel through traffic and to have a more convenient connection to Metro Manila.
Examples of developments that link these cities to Metro Manila are New Clark City in Angeles City, Pampanga; CAVITEx in key cities in Cavite; and the Mactan-Cebu International Airport in Lapu-Lapu City. The infrastructures could bring an influx of people from Metro Manila to other prime cities all over the country to invest in new lands and pipelined developments. Investing early on is a wise choice due to the increasing value of properties in the long run.
Strong Overseas Presence on Lamudi
According to the 2019 data by Lamudi, many seekers of Philippine real estate come from key cities all over the world. The increase of overseas seekers means that there will be profitability in condominium and housing projects catering to OFWs and Filipinos living in other countries.
Tourism as a Driver of Growth
Tourism has also contributed to the growth of key areas in terms of boosting the local economy and in promoting the beauty of popular tourist spots. Developers cultivate the area to invite tourists to invest in upcoming developments. Likewise, future property owners may choose to invest in their favorite tourist spots due to the increase in value of properties over time.
Lamudi’s Property Seeker Profile
According to Lamudi’s 2019 data, the majority of seekers belong to the 25 to 34 age group. This ‘millennial’ age group makes up 43.95 percent of the pageviews, and 48 percent of leads. The second highest leads come from those aged 35 to 44 with 16.9 percent, and the third highest are seekers aged 18 to 24 with 12.7 percent.
Figure 1. Age Distribution of Lamudi Seekers
In 2019, the bigger share of Lamudi’s searches and leads belonged to females, with 55.62 percent of views and 61.4 percent of leads, compared to the 44.37 percent of pageviews and 38.6 percent of leads by male seekers.
Figure 2. Gender Distribution of Pageviews on Lamudi
Property seekers on Lamudi show a strong interest in properties for sale, but make more inquiries for rentals. In the full year of 2019, Lamudi data shows that 60.59 percent of pageviews are for properties for sale, while 39.41 percent are for properties for rent.
Figure 3. Inquiry Distribution on Lamudi
For 2019, the most popular type of property searched by Lamudi seekers are condominiums, making up 31.4 percent of the total leads. The second most sought-after property are apartments with 23.76 percent, followed by houses with 22.3 percent.
Figure 4. Lead Distribution by Property Type
Figure 5. Buy vs. Rent Leads on Lamudi
Interestingly, despite condominiums having the most leads, most of the buying leads were for houses (36.02%), followed by land (31.64%). Condominiums fall in third place with 22.43 percent.
When it comes to renting, apartments are the seekers’ top choice, garnering 39.03 percent of the total renting leads. Condominiums are a close second with 37.35 percent, and houses come in third place with 13.19 percent.
COLLIERS INTERNATIONAL’S PROPERTY OUTLOOK IN 2020
Looking at the robust performance of the Philippine property sector in 2019, Colliers International shares key adjustments in the strategies employed by property players in the last year, such as:
- The development of more co-living projects in a bid to adjust to the worsening traffic in Metro Manila
- The focus on mid-income condominium units located in the fringes of the country’s major business districts, with a high potential in Cebu
- Landbanking and office construction outside the capital region, showing the developers’ consideration of the government’s infrastructure plan
- The identification of alternative expansion sites for POGO and BPO occupants
- Housing non-traditional mall tenants, including flexible workspace operators, in response to increasing vacancy and to sustain footfall
Figure 6. Philippines’ Infrastructure Spending as % of GDP
Overall, Colliers projects an upward growth trajectory, partly due to the government’s massive public infrastructure spending. The government’s objective of allocating 6% of its gross domestic product on infrastructure implementation will have a positive impact on the developers’ projects in key locations. According to Colliers, the construction of bridges, airports, railways, and toll roads in key areas around the Philippines unlock land values and strengthen the demand for transit-oriented developments.
According to Colliers International, there is a projected additional office supply of about 1 million square meters and a net take-up of 960,000 square meters in 2020. Vacancy rates will reach 6.2%, with a 5.5% growth rate by the end of the year.
Figure 7. Total Office Transactions
9M 2018 vs 9M 2019
Looking back at the office uptake in the first nine months of 2019, Colliers mentions POGOs as the dominant force in the office market, taking up 441,700 square meters of office space, which is 37% of the total space absorbed in Metro Manila for that period. Particularly, locations such as the Bay Area, Ortigas Center, and Quezon City are projected to house most offshore gaming firms, which will contribute to the increase in lease rates in these areas. Outside Metro Manila, Colliers also sees POGOs occupying more spaces in economic hubs such as Cebu, Cavite, and Clark in 2020.
Colliers projects about 15,610 additional residential units in 2020, which will outpace the annual completion of 10,700 units seen from 2016 to 2018, during a time when the industry benefited from the “trickle-down impact of offshore gaming demand.”
One of the challenges Colliers sees for 2020 is the shortage of skilled construction workers, which may cause the slow-down of residential project completions in the metro. Despite the headwinds and the uncertainty brought on by proposed tax reforms, Colliers maintains that the implementation of infrastructure projects in key areas outside Metro Manila, resulting in the emergence of urban townships, will drive up office and residential supply outside the capital region. For township development, Davao is a destination investors and developers should consider.
All the construction underway, however, has posed a problem in Metro Manila in the form of unbearable traffic jams. Until train lines, expressways, and subways are completed within 2022 to 2025, the major business districts Makati CBD, Ortigas Center, Fort Bonifacio, and the Bay Area will experience heavy traffic, which has spurred the decision of developers to build co-living residential places near business hubs. Colliers suggests incorporating childcare facilities, cooking areas, and private lounges to address the needs of the primary market of young professionals and employees of both outsourcing and non-outsourcing companies. There is also a possibility for the co-living trend to trickle down to key areas outside of Metro Manila.
College students are also another target market worth tapping into in 2020, with developers already seeing the potential in building near universities. Condominium projects near university areas in Manila, Pasay, and Quezon City also feature commercial tenants, fitness centers, and student lounges equipped with reliable Wi-Fi connections. Colliers mentions that the average dormer in Metro Manila is willing to pay P4,001 to P6,000 monthly. Their monthly cost of the commute is more than P4,500, which determines the amount they are willing to pay for rent to be near enough to walk or to take one bus, UV Express, or P2P ride to work.
Figure 8. Profile of a Typical Dormer in Metro Manila
Retail supply, according to Colliers International’s projection, will see about 310,000 square meters of new retail space this year. This additional supply will see vacancy rates rising to about 12%, and lease rates rising at 1%, a slower pace compared to last year’s 2%.
With about 1 million square meters of new leasable retail supply to be completed in the next three years, Colliers sees the need for mall operators to implement innovative leasing strategies to attract tenants and fill retail space. For Metro Manila mall developers, in particular, Colliers sees demand coming from flexible workspace operators, who are “scrambling to find suitable space” in prime locations such as the Makati CBD and the Bay Area because of office vacancies between 0.5% and 1%.
Citing Colliers USA’s research “Retail’s Newest Tenant: Coworking–Work Where You Shop,” Colliers notes the potential of flexible workspaces to drive consumer traffic and revenue spend for in-mall shops and restaurants. Respondents in the research said a flexible workspace located in a mall may encourage their decision to visit mall shops, particularly restaurants (73%).
Figure 9. Benefits of Flexible Workspace in Malls
The redevelopment of malls as a more lifestyle-centric location is a bid to attract younger mall-goers and retain old consumers, resulting in two things: improved consumer retail traffic and increased foot traffic.
Colliers International projects the completion of 3,300 rooms this year, which will likely be absorbed by the sustained growth in foreign arrivals. According to Colliers, this will bring occupancy rates to about 70%.
According to the Department of Tourism (DOT), tourist arrivals reached 6.8 million for the first nine months of 2019, showing a 15% increase in tourist arrivals compared to the same period in 2018. The Philippines’ top tourists are South Koreans, recording 1.6 million arrivals, followed by the recorded 1.5 million Chinese arrivals. Chinese tourists, in particular, have seen a 37% increase in arrivals, which is higher than the foreign arrival growth of 10-15% recorded from 2016 to 2018. This growth in arrivals will drive the hospitality sector forward, with higher hotel occupancy and spending in tourist destinations in and out of Metro Manila.
Figure 10. Chinese Tourist Arrivals in ASEAN
Colliers recommends developers build three and four-star hotels in Quezon City, specifically, to address its lack of quality accommodation to cater to major tourist groups. Outside the metro, it is worth looking into airports being developed, such as those in Clark, Pampanga; and Cavite, Bulacan, and Davao when considering areas of development.
LAMUDI’S REAL ESTATE OUTLOOK FOR 2020
While the majority of seekers looking for properties on Lamudi hail from cities in Metro Manila, there has been an increase in pageviews from provincial cities, particularly those in CALABARZON, Central Luzon, and Cordillera.
Residents of Bacoor, Antipolo, Baguio, Angeles, Dasmarinas, and Sta. Rosa are all in the top fifteen cities looking for property on Lamudi in 2019. Cavite’s proximity to Metro Manila may be the reason for the surge of property seekers in the area. This means that Cavite will have more residential developments constructed in its key areas, leading to the boom of its economy.
Angeles City, Pampanga also presents a strong base of seekers, making up 13.59 percent of the searchers outside of Metro Manila.
Figure 11. Location of Seekers in Luzon
Most of the property seekers on Lamudi hail from Metro Manila, particularly Quezon City (35.18%). In second place is Makati (23.10%), followed by the City of Manila (9.54%). While cities from Metro Manila garnered the most searches, provincial cities like Bacoor and Baguio are also in the top 10, showing that there is a growing appetite for real estate investment outside Metro Manila. Developers looking to expand to less saturated locations should consider the fringes of the metro, and nearby provinces such as Cavite.
Figure 12. Age Distribution of Seekers in Luzon
Majority of the total Lamudi seekers are aged 25 to 34, making up 47.70 percent of pageviews. Seekers aged 35 to 44 are in second place, showing that Filipinos develop an interest in property ownership at a young age, and continue to make inquiries as they become more financially stable in their mid-30s or progress to a new life stage.
Figure 13. Lead Distribution in Luzon
When choosing between vertical and horizontal developments, developers in Luzon might want to consider condominiums, the most popular type in 2019 with 32.71% of overall pageviews. Houses (35.57%) and land (31.20%) are also viable options, particularly if developers offer model units that allow for customization and combining of lots for an expanded property. Developers in the rental market, on the other hand, can focus on apartments (38.78%) and condominiums (38.22%), which are equally popular with only a 0.5% difference.
Cebu has the most property seekers on Lamudi from Visayas, accounting for over 87.53 percent of pageviews in the region. Hailed as the Queen City of the South, Cebu City serves as the economic center of Central Visayas and is home to many premier developments, townships, and a growing BPO center. With the proliferation of IT industries within the city, the demand for residential developments to be built close to these hubs increases among young professionals or millennials.
Cebu City is poised to become a hub of young professionals hailing from other areas in Central Visayas moving in to work and to invest in properties. This will also lead to the continuous shaping of the city’s urban landscape and the branching out of various industries outside of Metro Manila.
Figure 14. Age Distribution of Seekers in Visayas
Millennials, or those aged 25 to 34, remain to be the most active property seekers in Visayas with 43.98 percent of pageviews and 45.27 percent of leads. Female seekers make up the majority of searches, with 52.77 percent of pageviews and 59.94 percent of leads, hinting at a real estate market comprised of female young professionals or businesswomen who are ready to invest in property.
Figure 15. Location of Seekers in Visayas
The top three cities with the most seekers are Cebu, Bacolod, and Iloilo, with Cebu City accounting for almost 90% of pageviews from the region. These three cities promise profitability in their areas when it comes to real estate development.
Figure 16. Lead Distribution in Visayas
Seekers from Visayas tend to search for properties for sale (54.56%) compared to properties for rent (45.44%). Unlike in Luzon, the most searched property type are apartments (29.85%). Houses come in second place (25.89%), and condominiums come in third place (23.4%), showing the difference in lifestyle of the Visayas market.
Despite having the most pageviews, apartments only make up 0.54 percent of the total leads for buying. Land is the most-bought type of property (35.85%), and houses are close behind (34.47%). Interestingly, apartments remain to be the most favored type of property for renting among the Visayans, with 42.8 percent of the total leads for renting. Condominiums are in second place (24.83%), and houses are third (22.1%).
Zamboanga City is forecast to be a center of economic activity and residential developments. The increase of IT and BPO related industries in the city solidifies Zamboanga’s aim to become a smart city of the future, and in enhancing the use of government services, revenue and tax collection efforts, and transparency in operations.
Aside from the growing IT industries, Zamboanga City is involved in developing infrastructures like the Mindanao Railway and Zamboanga City-Zamboanga del Norte link road. These infrastructures are meant to link Zamboanga City to other cities in Mindanao, enhancing tourism and commerce in the area, and in propagating Zamboanga’s image as a smart city.
In terms of pageviews, the majority of the seekers are from Davao City (79.84%). Cagayan de Oro comes second with 11.85 percent of pageviews, showing that it could be the future economic hub of Northern Mindanao.
Figure 17. Age Distribution of Leads in Mindanao
Even in Mindanao, millennials continue to take the lion’s share of pageviews. Seekers aged 25 to 34 make up 42.74 percent of pageviews and 45.17 percent of leads in Mindanao. Like in Luzon and in Visayas, the majority of the seekers are female.
Figure 18. Lead Distribution in Mindanao
Leads for renting are significantly higher (68.2%) than the leads for buying (31.79%).
Apartments take most of the pageviews (33.16%); however, it only has 0.36% of buying leads. Condominiums make 22.98% of pageviews and 9.7% of buying leads, while houses take 22.85% of pageviews and 36.84% of buying leads. Land seems to be popular among seekers, with 12.54% of pageviews and 36.46% of buying leads. Leveraging the interest in apartments, commercial spaces, and condominiums and providing units with better amenities or more attractive prices may increase leads and buying activity.
Regarding activity from outside the country, millennial seekers abroad remain as the top age group interested in property in the Philippines, accounting for 30.33 percent of all pageviews. Next are those aged 35 to 44 (25.11%), followed by the 45 to 54 age group (19.75%).
Searching for real estate property isn’t new for Filipinos living in other countries and overseas Filipino workers or OFWs. Lamudi’s 2019 data showed the top overseas cities with the most seekers are Dubai, Doha, Sydney, Los Angeles, London, New York, Riyadh, Melbourne, Abu Dhabi, and Toronto.
Figure 19. Overseas Cities with Growing Interest in Philippine Real Estate
Toronto, which was not in 2018’s top ten overseas cities looking into Philippine real estate, entered the list in 2019, accounting for 1.55% of pageviews from outside the country. This shows an emerging market for real estate developers to tap into. The increase in interest from seekers located in Dubai is also worth mentioning, as the area is a popular location for OFWs.
Figure 20. Lead Distribution from Overseas Searches
Houses are the most popular type of property for seekers outside the country, with 31.44 percent of total leads and 45.12 percent in buying leads. Condominiums, which account for 27.13 percent of total leads, are popular for rental inquiries (41.33 percent).
The focus on sustainability, affordability, and comfort has shown emerging trends among real estate developers’ recently completed developments and pipelined projects. The use of sustainability in homes and in office spaces provides energy savings and protects the environment, which is what ecotourism advocates. When tourist hubs are conserved and well protected, the beauty of the place can be showcased to more tourists and investors in the future. This can also attract more people to visit and invest in a certain location for residential or commercial properties.
Tourism also attracts overseas seekers to key Philippine places, and developers can bank on their financial capabilities when developing projects mainly catering to OFWs and expatriates.
Further developments in business districts and in emerging cities give developers a chance to expand their portfolio and conceptualize more innovative and sustainable projects for the future. The burgeoning industries in these areas also bring in profitability for developers who plan to invest in future commercial spaces in these areas. In relation to this, the booming of IT-related industries also attracts more millennials to flock to the area for work, and potentially to invest in the conveniences and benefits of the growing lifestyle hubs.